3 Months In, Deficit Already Hits Record

Treasury Dept. Reveals $485.2 Billion Deficit Early In Budget Year

(CBS/AP)  The federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year, the Treasury Department said Tuesday.

The deficit is on track to surpass $1 trillion for all of fiscal 2009 and some economists believe it could go much higher.

The deficit for December totaled $83.6 billion, a sharp deterioration from a year ago when the government managed a surplus of $48.3 billion. Wall Street economists surveyed by Thomson Reuters expected a slightly lower deficit of $83 billion.

All the red ink is occurring because of the massive spending on the $700 billion financial rescue program and a prolonged recession which has depressed tax revenues.

The imbalance from October through December is the highest on record for a first quarter and surpasses the mark for a full budget year of $454.8 billion set last year.

The Congressional Budget Office last week projected that the deficit for this fiscal year will hit $1.2 trillion. But that projection does not include any of the costs from the economic stimulus program that President-elect Barack Obama is hoping Congress will pass in the next few weeks in an effort to keep the current recession from deepening.

The cost of Mr. Obama's two-year program is expected to be around $800 billion.

The red ink through December includes $247 billion that has been spent on the $700 billion financial rescue program that Congress passed on Oct. 3 to deal with the most serious financial crisis to hit the country since the 1930s.

Much of that money has been spent injecting fresh capital into banks in an effort to repair their balance sheets and encourage them to resume more normal lending. Part of the bailout funds also went to shore up insurance giant American International Group Inc. and the auto industry, with both General Motors Corp. and Chrysler LLC getting support.

The administration has committed the first half of the $700 billion rescue fund. On Monday, President George W. Bush, acting at the behest of Mr. Obama, asked Congress to release the second $350 billion.

Mr. Obama asked Democratic senators not to stand in the way of the additional $350 billion in bailout funds, calling the money essential to helping the troubled economy.

Mr. Obama made his pitch in a meeting in the Capitol, where he attended the Democratic senators' closed-door luncheon.

In an effort to deal with growing congressional unhappiness over how the program has been run, Mr. Obama has pledged to impose tighter controls on banks that receive the money to make sure they use the funds to increase lending, to devote greater resources to combatting mortgage foreclosures, and to help consumers and businesses obtain loans.

He also scrapped plans to offer businesses $3,000 tax credits for every job created after some Democrats complained the plan would be difficult to administer and ripe for abuse, reported the Washington Post.

The Treasury said in the first three months of this budget year, which began on Oct. 1, revenues totaled $547.4 billion, down by 9.7 percent from the year-ago period, mostly reflecting lower corporate tax collections because of the weak economy. Spending over that period totaled $1.03 trillion, an increase of 44.8 percent from a year ago.

Supporters of the bailout have argued that the government will get the bulk of the money back since it is being used to buy assets, mainly preferred stock in financial institutions. Once markets stabilize, the banks will buy their stock back from the government.

The deficit of $485.2 billion through December is more than four times the $108.8 billion in red ink recorded during the year-ago period.

[wvu74621]

Who''''s going to pay off all this debt? What happens when the interest on the debt consumes most of the federal budget? What happens when the US can''''t sell bonds anymore because people question the ability of the government to pay them back? What happens when Social Security payments swell to unimaginable amounts? And when all this happens at the same time, then what?


--------------------------------------------------------------------------------

Posted by ParisDakar at 09:51 AM : Jan 14, 2009

Me and you are going to pay it. Sad is''nt it.

[wvu74621]

You problem here is all the graft and corruption from top to bottom. The massive profit taking by those that we are depending on to bail us out of this is why we are where we are. The books have been cooked for years. The problem now is that there isn''''t anything left but cooked books. You don''''t really have any frame of reference to start from. Until we hit more than a false bottom in this economy we can''''t really start to build anthing on solid footing. As it is now, like it or not, the only way to keep people from starting a panic is to try to baffle everybody and make promises that are, for all intensive purposes, just smoke and mirrors. The American dollar is nothing but funny money. There is no Gold reserve or anything else to back it up but more paper. I just hope Obama is a master at child psychology, because if people don''''t buy into these so called "plans" we will hit a very deep bottom.


--------------------------------------------------------------------------------

Posted by jfrance5 at 11:29 AM : Jan 14, 2009

Good point. I live and work in Germany for the DOD. The Euro to dollar exchange rate is terrible. The american dollar is becoming less and less valuable. I think the switch to the euro by EU countries has affected the exchange rate. Before the swith I was getting a great exchange rate on the Deutsch mark. Ask most europeans and they will tell you the switch was a bad move.

[jfrance5]

You problem here is all the graft and corruption from top to bottom. The massive profit taking by those that we are depending on to bail us out of this is why we are where we are. The books have been cooked for years. The problem now is that there isn''t anything left but cooked books. You don''t really have any frame of reference to start from. Until we hit more than a false bottom in this economy we can''t really start to build anthing on solid footing. As it is now, like it or not, the only way to keep people from starting a panic is to try to baffle everybody and make promises that are, for all intensive purposes, just smoke and mirrors. The American dollar is nothing but funny money. There is no Gold reserve or anything else to back it up but more paper. I just hope Obama is a master at child psychology, because if people don''t buy into these so called "plans" we will hit a very deep bottom.

[yam250]

I agree Bush is the worst president EVER and anyone who tries to defend him IS NOT AN AMERICAN. This is no longer about rep. and dems. I don''t think some people know how bad it is going to get. This should have never been allowed to happen.

[talkingham]

George Jr. ran every company into the ground that his daddy ever bought him, including the US economy now as a whole. Obviously the worst liar and worst president in our history.

[yam250]

Maybe we should have elected Ross Perot when he was running. He trid to warren us way back when.

[parisdakar]

Maybe it won''t be all bad. We could sell California to the Japanese for a few trillion. And you''ll be able to buy national parks cheap. I''ll take Yellowstone!

[cowman290]

You are right ParisDakar. This is really scary. Check out this video; it supports your argument. I can''t vouch for its total accuracy but it scares me.

http://www.iousathemovie.com/

[cowman290]

You are right ParisDakar. This is really scary. Check out this video; it supports your argument. I can''t vouch for its total accuracy but it scares me.

http://www.iousathemovie.com/

[parisdakar]

Who''s going to pay off all this debt? What happens when the interest on the debt consumes most of the federal budget? What happens when the US can''t sell bonds anymore because people question the ability of the government to pay them back? What happens when Social Security payments swell to unimaginable amounts? And when all this happens at the same time, then what?

[cowman290]

The n should not be in the URL

[cowman290]

The graph below shows the national debt from 1950 to present. Before talking about Obama, please review;

http://zfacts.com/p/318.html

It started up aggressively with Reagan/Bush and again with the second Bush.

I apologize if I am not suppose to post other websites.

[stupidrules3]

Come on people, both parties are corrupt. They are all forgetting who they serve. It will continue until We, the People stand up and show them who they work for. If we keep sending these thieves to DC, we will keep getting the same thing. It is time that we take back our government from the 2 party system. With only 2 parties, it only takes a little time for them to figure out that they can both work in their own interest and forget about why they are really in office.

[irmcvet971]

obumer wants too spend 850 billion more how stupid
can you be

Posted by popstom11 at 03:25 PM : Jan 13, 2009

Yep here''s a EXCELLENT EXAMPLE of a member of the National Alliance of Zero Intelligence. This POOR simple minded fascist has sat back while we have YET again tried an ECONOMIC POLICY that has NEVER produced EVEN ONE MONTH that it was NOT running the nation into the RED. Never said the FIRST time we should change POLICIES AND the poor fool wants to CONTINUE that FAILURE!! AFTER 20 YEARS and 240 MONTHS they can point to ZERO Na Da, NOT ONE MONTH that it has NOT been running this nation into the red. But here the loser is, ranting against our new Prez BEFORE he''s even in office. Now IF that doesn''t qualify him and his Party as the National Alliance of Zero Intelligence what does. SIEG HEIL AMERICA!!

[irmcvet971]

GOP= Greed Over Principle.

Posted by blog_fever2 at 07:02 PM : Jan 13, 2009

Naw. GOP is NOW the NATIONAL ALLIANCE OF ZERO INTELLIGENCE... the N.A.Z.I Party!!

[inventagod2]

It cannot be said often enough...

WORST president in history.

Never again let a Republicon get near power!

[neocons_suck]

Why do conservatives hate America so much?

[swin5]

First you borrow a little and things seem OK. But you start to get used to the lifestyle and borrow some more. But then you have to pay interest on what you already borrowed, so to keep up the same lifestyle, you have to borrow even more. Then you reach a point where you''re spending more and more of the less and less that you''re making. At that point you can''t quit. And at that point it''s almost like you say ''What the hell'', and you have no fiscal responsibility whatsoever. Debt then increases exponentially for a brief time, and then the collapse. Like the bulb burning brightest before it burns out. Our government borrowing without limit now to shore up an economy inflated into the heavens on tremendous debt is that same light bulb. You are seeing the beginning of the end - an economic cataclysm is coming that is unprecedented in human history that will make the Great Depression of the 1930''s look like prosperity by comparison.

[dcbinwa]

Can we just declare bankruptcy and get it over with. No really folks it''s time to admit this, we can not pay off this debt, I mean will any of our lives stop if we just start from scratch, sure it will be painful at first but it''s really the only way to go. This debt is just insane.

Maybe we can become a provience(spg...it''s late) of China. Everyone thought Capatilism won but Russia Communism just fell before ours...does not mean it''s any better we just lasted a little longer...Hey We can have a military cermonial lowering of the flag and we can raise China''s instead. Hey I like there food...I''m all for it!

[hbevis]

Clinton left Bush a surplus - which he squandered
Now he leaves Obama, the worst financial condition
Since the Great Depression!! Posted by windmaster12

Clinton left a surplus because they put the Social Security fund into the General Fund...among other things.

But, Bush has some dumber than dumb things as well.

Obama is coming in next week with a mess to start with. I can''t say that I exactly like him, but I sure as Heck are going to give him a chance.